Prison service incompetence rather than state-sponsored conspiracy led to the death of the loyalist leader Billy Wright in the Maze jail in 1997, an official report concluded today.

The report found there was no evidence to support the allegation of Wright's family that MI5 conspired in the death of the founder of the Loyalist Volunteer Force.

Wright was shot dead on 27 December 1997, at a critical stage of the Northern Ireland peace process, by inmates belonging to the Irish National Liberation Army. He was being transferred to a visitors hall in the top-security prison to meet his girlfriend.

The 704-page report, released this afternoon, highlights a catalogue of security failures but has unearthed nothing to suggest there was official connivance in the murder of Wright, a hardline opponent of the peace process.

Special branch, the Northern Ireland prison service and MI5 are all subject to varying degrees of blame for neglecting to take sufficient precautions against the shooting inside the Maze prison.

The inquiry cost £30m and ran for five years, but the report's authors admitted they still did not know how the guns used to kill Wright ended up in the Maze.

"To our regret, no explanation emerged in the evidence as to how the two firearms were introduced into the prison and put into the hands of his INLA murderers," they concluded.

On claims of MI5's role in a plot, the report said: "The panel reject the charge of collusion made by the Wright family against the security service."

But the report said it was "most unfortunate" that MI5 officers did not communicate intelligence about a threat to Wright from the INLA as far back as April 1997.

Wright's father, David, who campaigned over the last 13 years for a public inquiry, is likely to issue a legal challenge to its findings. David Wright still claims there is sufficient evidence to point to collusion.

Instead, the report detailed a long list of security failings in and around H-Block 6, the section of the Maze that housed prisoners from the INLA and the LVF.

On all failings, the Billy Wright report concluded that this was "negligence not intentional".

Among the security lapses, each of which the authors said "facilitated" the death of Wright, were:

• The failure to identify two of Wright's killers, Christopher McWilliams and John Kenneway, as a threat.

• The failure to strengthen the roof of H-6, which the INLA gang climbed on to before dropping down into the exercise yard towards Wright, who was held in a minibus prior to a prison visit.

• The failure to lock down INLA prisoners for the night inside H-6.

• The failure to spot that the INLA inmates had cut a hole in the security fence of H-6 giving them access to the roof.

The report also criticised the Royal Ulster Constabulary for failing to pass on intelligence from agents within the INLA that the republican terror group had discussed killing Wright months before the murder.

Criticism was levelled at the Police Service of Northern Ireland for failing to provide lists of agents within the INLA who may have had prior knowledge of the planned murder.

Northern Ireland prison service officials came under criticism for believing the INLA's promises to have a "no strike policy" against loyalists.

"The panel agree with the view expressed by Sir Richard Tilt [one of the counsels in the inquiry] that a 'no first strike' deal was a wholly inadequate substitute for proper security and control."

Among the report's main recommendations was the suggestion that the Northern Ireland prison service be subjected to a root-and-branch reform programme, similar to that carried out by the former Tory chairman Chris Patten and his team which led to the evolution of the RUC into the PSNI.

In its conclusion the report states: "We have been critical of critical of certain individuals and institutions or state agencies, some of whose actions did, in our opinion, facilitate [Wright's] death. We were not, however, persuaded that in any instance there was evidence of collusive acts or collusive conduct."

Many of the relevant security files, it emerged, had been initially withheld or previously destroyed.

A "series of failures in the management of the Northern Ireland Prison Service (NIPS)" was identified.

No risk assessment was carried out before Wright was transferred to the Maze despite intelligence that there were republican threats against his life. Placing both LVF and INLA prisoners in the same wing of the Maze "was a wrongful act that directly facilitated the murder of Bill Wright", the inquiry found.

A Red Cross report in November 1997 that described the Maze as a "powder keg" was not properly considered by the prison service, the inquiry's report said.

One long-standing complaint of the Troubles surfaced in criticism that the RUC's special branch did not share information with the rest of the force. "There was a culture of secrecy and confidentiality that was endemic", the report said.

Jane Winter, of British Irish Rights Watch, said she was disappointed by the findings. "Weeks before it happened, prison officers in H6 told the prison service that INLA would come over the roof of the wing and kill Wright," she said. "There's a form of collusion where you sit back and let things take their course. Given that there had been previous warnings by the staff, I would say it was collusion."

Billy Wright, the former leader of the Loyalist Volunteer Force, was shot dead by Republican gunmen in the Maze Prison in 1997. The £30m inquiry into Wright's death is expected to be highly critical of security around the jail